PAAPAM meets FBR chairman for withdrawal of RD on steel products for auto sector


Lahore: A delegation of PAAPAM held a very constructive meeting with chairman FBR on the issue of RD on steel products and its impact the auto sector.

The chairman FBR Mr Tariq Bajwa assured the delegation that due consideration will be given to the case of RD with reference to PAAPAM. The delegation was led by its Senior Vice Chairman, Mumshad Ali, at FBR Head office. The PAAPAM delegation was also consisting of former chairman Munir K. Bana, Shariq Suhail, Ashraf Shaikh and Aamir Allahwala.

PAAPAM SVC Mumshad Ali protested against 15% regulatory duty on the imports of tubes, pipes and hollow profiles of cast iron, steel, flat rolled products of iron and alloy steel billets and bars. He said the Duty on various steel materials mainly used by PAAPAM members negates the claim of government to protect the local industry while the large re-rolling steel mills and other sectors like fan and other electrical goods industries have been totally exempted from RD within the same SRO.

He said that imposition of RD on auto parts manufacturers is totally unfair and unjustified, and negates the cascading principal of SRO 655, and in certain cases it is in violation of FTA with china, and in the case of case hardening steels the 15% RD is in addition to 5% import duty and 15% protection duty, and amounts to double taxation.

These items are imported by auto parts manufacturers under SRO 655(I)/2006, as these are not manufactured in Pakistan, and in case of alloy steels produced in Pakistan this duty is on top of existing slabs making the total impact on price by 30%.

PAAPAM delegation, quoting the FBR’s own data, said that an RD of Rs.1 billion had been collected so far, out of which APMs’ share was a just Rs.70 million (which is less than 1% of total RD collection). Therefore, PAAPAM argued that, on the one hand, the government revenue of Rs.70 million was not significant, and on the other, the effect of this levy will snuff out the industry, as it will be rendered uncompetitive against imported parts, due to a drastic reduction in tariff differential in violation of the cascading principle.

Former chairman, Munir Bana, pleaded as the PCT codes of raw materials manufactured by PSM are common for auto grade material, the auto parts industry has been burdened by this duty on their imports of raw materials. As a result, FBR’s own principle of ‘cascading structure of duties’ has also been inadvertently violated by the levy of RD on auto raw materials, which are not manufactured locally.

PAAPAM delegation stated that the local manufacturers will result in increase in cost of doing business for the local APMs, and making local auto part manufacturing uncompetitive by making the input costs higher. It is pertinent to mention here that the industry has already suffered a lot due to import of used cars, dumper trucks, and low tractor demand due to frequent changes in GST regime.

The delegation urged the chairman FBR to avoid frequent policy changes and give industry a level playing field to grow and contribute to the national exchequer.